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The Diary: Richard Thaler

By Richard Thaler

Published: April 11 2009 01:42 | Last updated: April 11 2009 01:42

It is spring break at the University of Chicago Booth School of Business where I am a professor, and I am to spend part of it in London, in a media blitz for my book, ‘Nudge’. I am tackling the trip alone, for the excellent reason that my co-author, Cass Sunstein, has been asked by President Barack Obama to direct the Office of Information and Regulatory Affairs (OIRA). (The US press refers to his job as the “Regulation Czar”).

This job is up Sunstein’s alley, since the thesis of Nudge is that we can help people make better decisions (as judged by themselves) by creating a more supportive choice environment in which people are “nudged” toward better choices rather having options either banned or mandated.

Our book found an audience among Obama advisors but has also been touted by Conservative leader David Cameron. My goals for the UK trip are simple: say nothing to embarrass Sunstein, Obama or Cameron, while talking about the book non-stop.

My UK schedule includes five talks, three dinner parties, and a mind-boggling number of interviews for radio, TV and print journalists. I try for a quiet day of post-flight rest and preparation before the onslaught begins.

Out for a walk near my Bloomsbury hotel, I am comforted to see the friendly “look right” signs on the pedestrian crossings. These are one of my favourite examples from the book. For those of us who are used to vehicles driving on the right (and correct!) side of the road, our instinct is to look left for oncoming cars, and thus risk a run-in with a double-decker bus. Then I walk past a bookshop and see a poster asking “Have you been Nudged yet?” My publisher is pulling out all the stops. I had better not blow it.

Penguin has experience with absent-minded authors and has assigned me a charming minder who guides me around town. Our first stop is BBC Radio 4’s Start the Week, where I am a guest with Piers Morgan, former Daily Mirror editor, and now the compulsory sarcastic Brit judge on the reality show America’s Got Talent. On the cover of his book Morgan is described as a “big mouth Brit”. He does not disappoint.

In media interviews the most popular topic of conversation is an example we give in Nudge about Schiphol airport in Amsterdam. A clever chap who was concerned with the cost of cleaning the men’s toilets got the idea of etching the image of a housefly into the urinals, just next to the drain. The fly is very realistic, and men seem hypnotically drawn to aim at it. The airport claims that “spillage” has been reduced by 80 per cent.

As we rush around London most of the interviews go well, but danger lurks while I am getting ready for the BBC World News. The producer tells us that the top story comes from the Czech Republic, which holds the EU presidency. Outgoing prime minister Mirek Topolánek has called the Obama stimulus package the “road to hell”. (A phrase apparently inspired by the band AC/DC, whom Topolánek had recently seen in concert.) Would I care to comment on that? Many lines that seem witty jump into my head, but before I can get into trouble my minder saves the day by bringing up urinals. Crisis averted.

In the taxi we check a BlackBerry and find that ‘Nudge’ has jumped to number 17 on the Amazon.co.uk best-sellers list. So I set off in cheerful spirits to the London School of Economics. At dinner I am sitting next to cabinet secretary Sir Gus O’Donnell, the country’s top civil servant. (My minder says he “basically runs the country”.)

O’Donnell studied economics at Oxford and, gratifyingly, turns out to be a fan of Nudge, and of my research field generally. The idea of behavioural economics (radical to some) is that agents in the economy are humans, not the hyper-rational emotionless creatures of economics textbooks.

I, in turn, am intrigued by O’Donnell’s job, and the considerably larger group of professional civil servants in the UK than in the US. The only branch of the US government that runs like this is the military. Although there are career civil servants elsewhere in government, none rise to the highest levels. I can see the advantages of a deeper non-partisan system and make a note to talk to Sunstein about it. Meantime, I am wondering if there is a way to clone O’Donnell.

The next day I speak at an event with the Tories in the City. The running order is George Osborne, the shadow chancellor, Conservative MP Oliver Letwin, me, and finally Cameron. We are talking about the lessons of the economic crisis for financial regulation. Cameron is in good form. He links the crisis to crime. “We are the party of law and order, so we are the party to bring law and order to financial markets.”

Cameron and I have five minutes for a one-on-one. He pretends he would rather talk shop with me than go to his next gig. He seems to share some policy wonk tendencies with Obama.

Dinner that evening is at the offices of the right-leaning Spectator magazine. There I am delighted to meet Rory Sutherland, Spectator technology columnist and a long-time Nudge advocate. He has contributed several clever entries to our blog (www.nudges.org). My favourite is the story of Frederick the Great of Prussia, who nudged the local peasants to plant potatoes. He grew some in the royal garden, which made them look valuable, and then allowed some of his own crop to be filched, so the peasants could plant them on their own land.

My trip ends with a raucous dinner organised by Richard Reeves, director of the think-tank Demos. I am between two MPs, Conservative Greg Clark and Labour’s David Lammy. The latter is an ardent Obama supporter and we reminisce about election night in Chicago and the inauguration. At one point he gives a rousing speech. Those around him are ready to back him, but he leaves before we can find out what office he is running for.

The evening’s chief provocateur is Phillip Blond, director of the Progressive Conservatism Project at Demos. Blond stirs the conversation pot by arguing that society should discourage adoption of children by gay couples. There is much hooting around the table and a call for data supporting his claim that having one parent of each sex is best for kids. Instead, Blond resorts to a line of argument I find weak, namely that since humans have raised kids in heterosexual couples for aeons, it must be good.

I counter that the tradition of hand shaking is an unhygienic practice, and should be replaced by namaste, the Yogic palm-facing greeting, so you only touch your own hands. Later in the evening several departing guests use this as their exit greeting. I guess they were nudged.

Richard Thaler is the Ralph and Dorothy Keller Distinguished Service Professor of Behavioural Science and Economics at the University of Chicago Booth School of Business and the author (with Cass R. Sunstein) of ‘Nudge: Improving Decisions about Health, Wealth and Happiness’, Penguin £9.99

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